Although the number of pending home sales in November rose to the highest level in the past 18 months, the National Association of Realtors (NAR) warns that the news probably is not quite as good as it sounds. Although contract signings usually indicate positive movement for a property, agents warn that these days, there are a lot of pitfalls in between signing your name on the dotted line and actually buying a house. So although NAR’s sales agreements index jumped 7.3 percent last month to a “healthy” reading of 100.1 (100 is considered healthy), myriad issues with contract fulfillment are keeping actual sales numbers down. In fact, one-third of all realtors say that they have had one contract fall through between October 2011 and November 2011, up 18 percent from the number who reported such issues in September of this year.
NAR chief economist Lawrence Yun points out that with “housing affordability conditions at a record high…and pent-up demand from buyers who’ve been on the sidelines,” the turnout from the high contract volume last month should bear fruit in early 2012. However, he admits, buyers are running into problems, “often with the mortgage” that are causing them to back out of the purchase. Jeffrey Mezger, CEO of KB Home, also views the pending sales numbers with cautious optimism since even though inventory levels are continuing to ease in many markets – “a prerequisite for a housing recovery” – real estate prices continue to fall, “indicating the market continues to be weighed down by foreclosures.”
Do you think that the market is hitting bottom?
Thank you for reading the Bryan Ellis Real Estate Letter!
Your comments and questions are welcomed below.